Schaeuble Says EU Debt Sharing Would Spell Europe’s Decline

Nov. 21 (Bloomberg) -- German Finance Minister Wolfgang
Schaeuble said there’s no rolling back the reform course in the
Europe Union and that resorting to any form of debt sharing
would ultimately lead to Europe’s demise.

Schaeuble, speaking to a meeting of insurers in Berlin
today, said that he had told the European Central Bank of the
risk that its monetary policy set “wrong incentives.” Rather,
it’s necessary for countries to “stay the course” agreed upon
by policy makers during the euro-area debt crisis that emerged
in Greece four years ago, he said.

“Any mutualization of liabilities, in whatever shape,
would lead to the contrary,” Schaeuble said. “It would mean
the decline of Europe in a rapidly changing world. That’s why
monetary policy also mustn’t create the wrong incentives.”

The remarks by Schaeuble, made in the week the central
bank’s Governing council is holding a mid-month meeting in
Frankfurt, suggest that he backs the view of Bundesbank chief
Jens Weidmann, who has warned against further loosening of
monetary policy.

The ECB has reduced its benchmark lending rate to a record
low of 0.25 percent and is considering a smaller-than-normal cut
in the deposit rate if officials decide to take it negative for
the first time, according to two people with knowledge of the
debate.

Schaeuble said that the German government’s council of
economic advisers had “pointed out clearly” the risks of
“wrong incentives” through monetary policy in its recent
report. “I have ensured that the opinion was made available to
the ECB,” he said.

Schaeuble, who was Chancellor Angela Merkel’s point man
during the sovereign debt crisis that dominated her second term,
is due to take his message to a meeting of European finance
ministers in Brussels tomorrow. He has said he wants to serve as
German finance minister in negotiations now under way in Berlin
on forming Merkel’s third-term government.